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Tesla’s giant battery in Australia reduced grid service cost by 90%

Tesla’s giant battery in Australia reduced grid service cost by 90%

Tesla’s giant Powerpack battery in Australia has been in operation for about 6 months now and we are just starting to discover the magnitude of its
impact on the local energy market.

A new report now shows that it reduced the cost of the grid service that it performs by 90% and it has already taken a majority share of the market.

When an issue happens or maintenance is required on the power grid in Australia, the Energy Market Operator calls for FCAS (frequency control and ancillary
services) which consists of large and costly gas generators and steam turbines kicking in to compensate for the loss of power.

Electricity rates can be seen reaching $14,000 per MW during those FCAS periods.

Now McKinsey and Co partner Godart van Gendt presented new data at the Australian Energy Week conference in Melbourne this week and claimed that Tesla’s
battery has now taken over 55% of the FCAS services and reduced cost by 90%.

“In the first four months of operations of the Hornsdale Power Reserve (the official name of the Tesla big battery, owned and operated by Neoen), the frequency ancillary services prices went down by 90 per cent, so that’s 9-0 per cent. And the 100MW battery has achieved over 55 per cent of the FCAS revenues in South Australia. So it’s 2 per cent of the capacity in South Australia achieving 55 per cent of the revenues in South Australia.”

South Australia is reportedly the only state that has seen a decline in FCAS costs over the period. Some estimates put the savings at over $30 million
in just a few months.

Tesla Energy’s regional manager of business development Lara Olsen was also at the conference and she explained that thermal plants are bidding on
FCAS based on their fuel costs, which are volatile, while Tesla is charging its batteries from wind power at a stable and cheap price.

The success of the project in Australia has led to a lot more demand for Tesla’s stationary energy storage products.